Yet after all this, the grand promise of an end to the suffering was never fulfilled. As the state sector drained the private sector, controlling it in alarming detail, the economy continued to wallow in depression. The combined impact of Herbert Hoover’s and Roosevelt’s interventions meant that the market was never allowed to correct itself. Far from having gotten us out of the Depression, FDR prolonged and deepened it, and brought unnecessary suffering to millions.
– Robert Higgs, Ph.D. – How FDR Made the Depression Worse, February 1995
If there is one historical figure that engenders almost godlike reverence in the mind of a “progressive”, it is Franklin Delano Roosevelt. Time Magazine has run covers with Obama morphed into FDR and June of 2009, produced a piece titled: FDR’s Lessons for Obama:
Writing to his fellow Democrats in the 1920s, Roosevelt noted that their party could not hope to return to power until the Republicans led the nation “into a serious period of depression and unemployment.” The Great Depression soon brought a far longer and deeper period of woe than F.D.R. foresaw. But the crisis of the 1930s also provided an object lesson in the relationship between economic danger and political opportunity — a lesson Barack Obama is now trying to follow. Obama, too, came to office in the midst of an economic crisis, and in the solutions he has offered, it appears he has often looked to the example of F.D.R., whose presidency — and the very idea of activist government that it represents — is very much back in the public mind this year. Roosevelt pushed through policies that aimed not just to deal with the immediate challenge of the Great Depression but also to benefit generations of Americans to come. Pulling off a similar feat will require Obama to persuade Americans to see opportunities in the present crisis as well.
But being a left leaning magazine, it is two magazines in one because only one year later, Obama is not FDR:
A year ago, with the prospect of a second Great Depression terrifyingly real, many were quick to cast Barack Obama as another FDR. The prospect of a 21st century New Deal formed part of a larger narrative about the 2008 election. Fueled by anger over two unpopular wars, an economy in meltdown and simple Bush fatigue, voters weren’t merely repudiating the status quo. In choosing Obama, they had transformed a center-right country into a center-left one.
Lost in the euphoria surrounding Obama’s victory, here was a change of the seismic variety, though admittedly far removed from the new President’s vision. Indeed, it suggested that a tipping point had been reached; foreshadowing the fierce resistance to health care reform in a nation where most people were already insured, and most of those seemed content with the status quo. Far from riding history’s crest, Obama found himself shouting into the wind.
I would strongly argue that he is fully the heir of FDR.
The similarities of the financial crisis that was occurring as he came to office are many. Where FDR had rampant stock speculation and an overleveraged market (one that was assumed to be able to continue to appreciate forever), Obama had an overheated mortgage market and overleveraged mortgage holders, but the similarities don’t end there. Obama has pursued economic policies very similar to those of FDR – much to the same effect – they have made the recession worse, as did the policies of FDR worsen the Great Depression.
Dr. Robert Higgs is Senior Fellow in Political Economy for The Independent Institute and Editor of the Institute’s quarterly journal The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague. He has been a visiting scholar at Oxford University and Stanford University, and a fellow for the Hoover Institution and the National Science Foundation.
In their understanding of the Depression, Roosevelt and his economic advisers had cause and effect reversed. They did not recognize that prices had fallen because of the Depression. They believed that the Depression prevailed because prices had fallen. The obvious remedy, then, was to raise prices, which they decided to do by creating artificial shortages. Hence arose a collection of crackpot policies designed to cure the Depression by cutting back on production. The scheme was so patently self-defeating that it’s hard to believe anyone seriously believed it would work.
The goofiest application of the theory had to do with the price of gold. Starting with the bank holiday and proceeding through a massive gold-buying program, Roosevelt abandoned the gold standard, the bedrock restraint on inflation and government growth. He nationalized the monetary gold stock, forbade the private ownership of gold (except for jewelry, scientific or industrial uses, and foreign payments), and nullified all contractual promises–whether public or private, past or future–to pay in gold…
Even more tragic is the lasting legacy of Roosevelt. The commitment of both masses and elites to individualism, free markets, and limited government suffered a blow in the 1930s from which it has yet to recover fully. The theory of the mixed economy is still the dominant ideology backing government policy. In place of old beliefs about liberty, we have greater toleration of, and even positive demand for, collectivist schemes that promise social security, protection from the rigors of market competition, and something for nothing.
Compare that last paragraph to Time’s assessment of Obama – just remember it was written in 1995 when Obama was an associate with Davis, Miner, Barnhill & Galland, a 13-attorney law firm specializing in civil rights litigation and neighborhood economic development – i.e. community organizing.
Jamera8, a “progressive” Obama supporter commenting in our local paper, The Panama City News Herald, laments that Obama faces the same Republican opposition that FDR did. He states:
Read FDR’s campaign speech in 1936 about GOP obstructionist actions then and you will be impressed and utterly amazed how the GOP has stood still all these years, as everything he said in 1936 applies to them today. Read it, I challenge all.
I hope people do follow Jamera8’s advice because an honest examination will show that the Republicans of 1936 were right as are the conservative Republicans and Tea Party members today.
Obama is FDR without WWII to save him.